<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: April 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________________ to _____________________
Commission File number: 0-028176
Whitehall Jewellers, Inc.
(Exact name of registrant as specified in its charter)
Delaware 36-1433610
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
155 N. Wacker Drive, Suite 500, Chicago, IL 60606
(Address of principal executive offices)
312/782-6800
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal
year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes___ No___
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
The number of the Registrant's common stock $.001 par value per share,
outstanding as of April 30, 1999 was 9,624,539 and the number of the
Registrant's Class B common stock $1.00 par value as of April 30, 1999 was
101.298.
<PAGE> 2
WHITEHALL JEWELLERS, INC.
INDEX TO FORM 10-Q
FOR THE QUARTER ENDED APRIL 30, 1999
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Statements of Operations (unaudited) for the three months ended
April 30, 1999 and 1998
Balance Sheets - April 30, 1999 (unaudited), January 31, 1999 and
April 30, 1998 (unaudited)
Statements of Cash Flows (unaudited) for the three months ended
April 30, 1999 and 1998
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Item 3. Quantitative and Qualitative Disclosure About Market Risk
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security-Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(b) Reports on Form 8-K
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Whitehall Jewellers, Inc.
Statements of Operations
for the three months ended April 30, 1999 and 1998
(unaudited)
(in thousands, except for per share data)
1999 1998
---------- ----------
Net sales $ 58,935 $ 41,584
Cost of sales (including buying and occupancy
expenses) 35,948 25,445
---------- ----------
Gross profit 22,987 16,139
Selling, general and administrative expenses 19,830 14,193
---------- ----------
Income from operations 3,157 1,946
Interest expense 1,257 814
---------- ----------
Income before income taxes 1,900 1,132
Income tax expense 732 430
---------- ----------
Net income $ 1,168 $ 702
========== ==========
Basic earnings per share:
Net income $ 0.12 $ 0.07
========== ==========
Weighted average common shares and common
share equivalents 9,893 10,170
========== ==========
Diluted earnings per share:
Net income $ 0.12 $ 0.07
========== ==========
Weighted average common shares and common
share equivalents 10,029 10,405
========== ==========
The accompanying notes are an integral part of the financial statements.
3
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Whitehall Jewellers, Inc.
Balance Sheets
(unaudited, in thousands, except per share amounts)
<TABLE>
<CAPTION>
(Audited)
April 30, 1999 January 31, 1999 April 30, 1998
-------------- ---------------- --------------
<S> <C> <C> <C>
ASSETS
Current Assets:
Accounts receivable, net $ 1,701 $ 3,147 $ 1,375
Layaway receivables, net 3,357 3,514 2,604
Merchandise inventories 134,483 116,748 105,393
Other current assets 1,129 1,329 979
Deferred financing costs 362 143 252
Deferred income taxes, net 1,518 1,518 1,257
-------------- ---------------- --------------
Total current assets 142,550 126,399 111,860
Property and equipment, net 37,264 34,304 24,605
Goodwill 6,369 6,448 ---
Deferred financing costs 1,219 1,529 557
Deferred income tax, net 926 926 1,953
-------------- ---------------- --------------
Total assets $ 188,328 $ 169,606 $ 138,975
============== ================ ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Outstanding checks, net $ 4,436 $ 7,853 $ 1,565
Revolver loan 44,000 28,886 26,300
Current portion of long-term debt 2,500 2,750 1,250
Accounts payable 45,118 25,601 36,204
Accrued payroll 2,612 4,174 2,401
Income taxes 629 5,226 79
Other accrued expenses 16,224 13,431 10,620
-------------- ---------------- --------------
Total current liabilities 115,519 87,921 78,419
Total long-term debt, net of current portion 17,140 17,890 10,566
Other long-term liabilities 1,627 1,627 1,462
-------------- ---------------- --------------
Total liabilities 134,286 107,438 90,447
Commitments and contingencies
Stockholders' equity:
Common stock 10 10 10
Class B common stock --- --- ---
Class C common stock --- --- ---
Class D common stock --- --- ---
Additional paid-in capital 60,024 60,008 59,928
Accumulated earnings (deficit) 3,318 2,150 (11,410)
-------------- ---------------- --------------
63,352 62,168 48,528
Less:
Treasury stock, at cost (565,500 shares) (9,310) --- ---
-------------- ---------------- --------------
Total stockholders' equity, net 54,042 62,168 48,528
-------------- ---------------- --------------
Total liabilities and stockholders' equity
$ 188,328 $ 169,606 $ 138,975
============== ================ ==============
</TABLE>
The accompanying notes are an integral part of the financial statements.
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Whitehall Jewellers, Inc.
Statements of Cash Flows
for the three months ended April 30, 1999 and 1998
(unaudited, in thousands)
<TABLE>
<CAPTION>
Three months ended
------------------
April 30, 1999 April 30, 1998
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,168 $ 702
Adjustments to reconcile net loss to net cash (used in) provided by
operating activities:
Depreciation and amortization 1,587 1,080
Loss on disposition of assets 23 27
Changes in assets and liabilities:
Decrease in accounts receivable, net 1,446 1,157
Decrease in layaway receivables, net 157 32
Increase in merchandise inventories, net of gold consignment (17,735) (20,340)
Decrease in other current assets 200 17
Increase in accounts payable 19,517 19,679
Decrease in accrued liabilities (3,366) (598)
-------------- --------------
Net cash provided by operating activities 2,997 1,756
Cash flows from investing activities:
Capital expenditures (4,400) (2,945)
-------------- --------------
Net cash used in investing activities (4,400) (2,945)
Cash flows from financing activities:
Borrowing on revolver loan 81,000 145,754
Repayment of revolver loan (68,901) (136,295)
Repayment of term loan (1,000) (250)
Proceeds from gold consignment 3,015 ---
Purchase of treasury stock (9,310) ---
Proceeds from exercise of stock options 16 23
Decrease in outstanding checks, net (3,417) (8,043)
-------------- --------------
Net cash provided by financing activities 1,403 1,189
-------------- --------------
Net change in cash and cash equivalents --- ---
Cash and cash equivalents at beginning of period --- ---
-------------- --------------
Cash and cash equivalents at end of period $ --- $ ---
============== ==============
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
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Whitehall Jewellers, Inc.
Notes to Financial Statements
1. Description of Operations
The financial statements of Whitehall Jewellers, Inc. (the "Company")
include the results of the Company's chain of specialty retail fine jewelry
stores. The Company operates exclusively in one business segment, specialty
retail jewelry. The Company has a national presence with 262 stores as of April
30, 1999, located in 29 states, operating in regional or superregional shopping
malls.
2. Acquisition
On September 10, 1998, the Company acquired substantially all of the assets
of 36 jewelry stores operating under the Jewel Box name from Carlyle & Co.
Jewelers and its affiliates, headquartered in Greensboro, North Carolina. The
stores are located in eight states in the Southeastern United States. The
Company purchased all associated inventory, accounts receivable and fixed assets
for approximately $22 million (including fees and other costs) in cash. The
Company financed the acquisition through a term loan and revolving credit
facility under its new Credit Agreement. In a related transaction, the Company
sold all of the acquired Jewel Box customer accounts receivable for cash to
BancOne, N.A.
The acquisition has been accounted for using the purchase method of
accounting, and, accordingly, the purchase price has been allocated to the
assets purchased and the liabilities assumed based upon the fair values at the
date of acquisition. The excess of the purchase price over the fair values of
the net assets acquired was approximately $6.6 million, and has been recorded as
goodwill which is being amortized on a straight-line basis over 25 years. The
amount of goodwill amortization in the first quarter of 1999 was $66,000.
The net purchase price was allocated as follows:
(in thousands)
Inventory $ 9,636
Accounts receivable 3,902
Other current assets 121
Fixed assets 1,861
Other accrued expenses (315)
Goodwill 6,555
- ---------------------------------------------------
Purchase price $21,760
===================================================
3. Summary of Significant Accounting Policies
Basis for Presentation
The accompanying Balance Sheet as of January 31, 1999 was derived from the
audited financial statements for the year ended January 31, 1999. The
accompanying unaudited Balance Sheets as of April 30, 1999 and 1998 and the
Statements of Income and Cash Flows for the three months ended April 30, 1999
and 1998 have been prepared in accordance with generally accepted accounting
principles for interim financial information. The interim financial statements
reflect all adjustments (consisting only of normal recurring accruals) which
are, in the opinion of management, necessary for a fair statement of the results
for the interim periods presented. The interim financial statements should be
read in the context of the Financial Statements and footnotes thereto included
in the Whitehall Jewellers, Inc. Annual Report for the fiscal year ended January
31, 1999. References in the following notes to years and quarters are references
to fiscal years and fiscal quarters.
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4. Accounts Receivable, Net
Accounts receivable are shown net of the allowance for doubtful accounts of
$1,185,000, $1,027,000, and $690,000 as of April 30, 1999, January 31, 1999 and
April 30, 1998, respectively.
5. Inventory
As of April 30, 1999, January 31, 1999 and April 30, 1998, merchandising
inventories consist of:
April 30, 1999 January 31, 1999 April 30, 1998
(in thousands)
Raw Materials $ 6,591 $ 4,177 $ 6,649
Finished Goods 127,892 112,571 98,744
--------------- ----------------- ---------------
Inventory $ 134,483 $ 116,748 $105,393
=============== ================= ===============
Raw materials primarily consist of diamonds, precious gems, semi-precious
gems and gold. Included within finished goods inventory are allowances for
inventory shrink, scrap, and miscellaneous costs of $3,926,000, $3,948,000, and
$1,713,000 as of April 30, 1999, January 31, 1999 and April 30, 1998,
respectively. As of April 30, 1999, January 31, 1999 and April 30, 1998,
consignment inventories held by the Company that are not included in the balance
sheets total $39,470,000, $37,778,000, and $30,470,000, respectively.
In addition, gold consignments of $24,294,000, $21,279,000 and $15,295,000
are not included in the Company's balance sheets as of April 30, 1999, January
31, 1999 and April 30, 1998, respectively.
6. Financing Arrangements
Effective September 10, 1998, the Company entered into an Amended and
Restated Revolving Credit, Term Loan and Gold Consignment Agreement (the "Credit
Agreement") with its bank group to provide for a total facility of $110.0
million through September 10, 2003. Beginning with the quarter ending January
31, 1999, interest rates and the commitment fee charged on the unused facility
float in a grid based upon the Company's quarterly financial performance.
Under this agreement, the banks have a security interest in substantially
all of the assets of the Company. The Credit Agreement contains certain
restrictions on capital expenditures, payment of dividends and assumption of
additional debt and requires the Company to maintain specified minimum levels of
certain financial measures, including fixed charge ratio and certain balance
sheet measures.
Revolver Loan
The revolving loan facility under the Credit Agreement is available up to a
maximum of $90.0 million, including amounts borrowed under the gold consignment
facility, and is limited by a borrowing base computed based on the value of the
Company's inventory and accounts receivable. Interest rates and commitment fees
on the unused facility float in a grid based on the Company's quarterly
financial performance.
The interest rates for borrowings under this agreement are, at the
Company's option, Eurodollar rates plus 175 basis points or the banks' prime
rate. Interest is payable monthly for prime borrowings and upon maturity for
Eurodollar borrowings. The interest expense under the current and former
revolver facilities for the three months ended April 30, 1999 and 1998 was
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$609,000 and $414,000, reflecting a weighted average interest rate of 7.0% and
7.3%, respectively.
Term Loans
The term loan facility under the Credit Agreement is available up to a
maximum of $20.0 million. The interest rates for these borrowings are, at the
Company's option, Eurodollar rates plus 225 basis points or the banks' prime
rate plus 50 basis points. Interest is payable monthly for prime borrowings and
upon maturity for Eurodollar borrowings. Interest rates and the commitment fee
charged on the unused facility float in a grid based on the Company's quarterly
financial performance. The interest expense for the current and former term loan
facilities for the three months ended April 30, 1999 and 1998 was $352,000 and
$212,000 reflecting a weighted average interest rate of 7.3% and 7.8%
respectively.
Gold Consignment Facility
During the second quarter of 1996, the Company sold and simultaneously
consigned a total of 39,000 troy ounces of gold for $15.3 million under a gold
consignment facility. During the second quarter of 1998, the Company sold and
simultaneously consigned an additional 20,000 troy ounces of gold for $6.0
million. On March 3, 1999, the Company sold and simultaneously consigned 10,500
troy ounces of gold for $3.0 million. The facility provides for the sale of a
maximum 115,000 troy ounces or $40.0 million. Under the agreement, the Company
pays consignment fees of 175 basis points over the rate set by the bank based on
the London Interbank Bullion Rates payable monthly. Consignment rates and
commitment fees on the unused portion of the gold consignment facility float in
a grid based upon the Company's quarterly financial performance. The consignment
fees totaled $166,000 at a weighted average rate of 3.5% and $102,000 at a
weighted average rate of 3.5% for the three months ended April 30, 1999 and
1998, respectively. On September 10, 2003, the Company is required to repurchase
69,500 troy ounces of gold under this agreement at the prevailing gold rate in
effect on that date, or the facility will be renewed.
Subordinated Notes
Series C Senior Subordinated Notes due 2004 (the "Series C Notes") totaling
$640,000 aggregate principal amount outstanding as of April 30, 1999, bear
interest at 12.15% per annum payable in cash, with interest payments due
quarterly. In January 1998, $9,880,000 of the Series C Notes were redeemed at a
premium of $1,087,000. Interest expense was $19,000 for the three months ended
April 30, 1999 and 1998, respectively.
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7. Dilutive Shares That Were Outstanding During the Period
The following table summarizes the reconciliation of the numerators and
denominators, as required by SFAS No. 128, for the basic and diluted EPS
computations at April 30, 1999 and 1998.
Three months ended
April 30, 1999 April 30, 1998
---------------- ----------------
(in thousands, except per share amounts)
Net earnings for basic and diluted EPS $ 1,168 $ 702
Weighted average shares for basic EPS 9,893 10,170
Incremental shares upon conversions:
Stock options 136 235
Weighted average shares for diluted EPS 10,029 10,405
9
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PART I - FINANCIAL INFORMATION
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
Net sales for the first quarter of fiscal 1999 increased $17.4 million, or
41.7%, to $58.9 million. Comparable store sales increased $5.4 million, or
12.3%, in the first quarter of fiscal 1999. Sales for the Jewel Box stores
(purchased in September 1998) contributed approximately 1.4% of the comparable
store sales increase in the first quarter of fiscal 1999. Sales from new stores
contributed $8.1 million to the overall sales increase. Sales from the acquired
stores contributed $4.3 million in increased sales. The total number of
merchandise units sold increased by approximately 39.8% in the first quarter of
fiscal 1999, while the average price per merchandise sale increased to $301 in
fiscal 1999 from $292 in fiscal 1998. Comparable store sales increased in part
due to the strong economic environment for jewelry purchases, increased use of
non-recourse credit, enhanced marketing programs, strong store inventory
assortments and the contribution from acquired jewelry stores. The Company
opened 13 new stores and closed one store in the first quarter of fiscal 1999,
increasing the number of stores to 262 as of April 30, 1999 compared to 198 as
of April 30, 1998.
Gross profit increased $6.8 million, or 42.4%, to $23.0 million in the
first quarter of fiscal 1999 compared to the same period in fiscal 1998. Gross
profit as a percentage of sales increased to 39.0% in the first quarter of
fiscal 1999 compared to 38.8% in the first quarter of fiscal 1998. This increase
primarily resulted from higher merchandise margins, and lower store occupancy
and buying expenses.
Selling, general and administrative expenses increased $5.6 million, or
39.7%, to $19.8 million in the first quarter of fiscal 1999 from $14.2 million
in the first quarter of fiscal 1998. New stores accounted for $4.3 million of
this increase. As a percentage of net sales, selling, general and administrative
expenses declined to 33.6% in the first quarter of fiscal 1999 compared to 34.1%
in the first quarter of fiscal 1998. The dollar increase primarily relates to
higher payroll expenses of $4.0 million, higher other operating expenses of $1.1
million and a $0.4 million increase in advertising expense. Credit sales as a
percentage of net sales increased to 41.2% in the first quarter of fiscal 1999
from 39.6% in the first quarter of fiscal 1998, primarily as a result of
increased sales through secondary credit programs.
Interest expense increased approximately $0.5 million to $1.3 million in
the first quarter of fiscal 1999 from $0.8 million in the first quarter of
fiscal 1998. The impact of higher average borrowings was partially offset by
reduced interest rates.
Income tax expense increased $0.3 million to $0.7 million in the first
quarter of 1999 from $0.4 million in the prior period, reflecting an effective
annual tax rate of 38.5% and 38.0%, respectively.
Net income increased to approximately $1.2 million in the first quarter of
fiscal 1999 compared to $0.7 million in the first quarter of fiscal 1998 as a
result of the factors discussed above.
Liquidity and Capital Resources
The Company's cash requirements consist principally of funding increases in
inventory at existing stores, capital expenditures and acquisitions of new
stores and working capital (primarily inventory) associated with the Company's
new stores. The Company's primary sources of liquidity have been cash flow from
operations and bank borrowings under the Company's revolver.
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The Company's inventory levels and working capital requirements have
historically been highest in advance of the Christmas season. The Company has
funded these seasonal working capital needs through borrowings under the
Company's revolver and increases in trade payables and accrued expenses.
On February 19, 1999, the Company announced that its Board of Directors had
authorized the repurchase of up to $10.0 million of its Common Stock. The
repurchase program authorizes the Company to purchase shares over an 18-month
period in the open market or through privately negotiated transactions. To date,
the Company has repurchased 565,500 shares at a total cost of approximately $9.3
million. The program has been financed using the Company's revolving credit
facility.
The Company's cash flow from operating activities increased to $3.0 million
in the first quarter of 1999 from $1.8 million in the first quarter of fiscal
1998. Higher income from operations together with increases in accounts payable
($19.5 million), higher depreciation and amortization ($1.6 million) and reduced
accounts receivable ($1.4 million) were offset by increases in merchandise
inventories ($17.7 million) and by a decrease in accrued liabilities ($3.4
million). The increase in merchandise inventories primarily related to inventory
for new store openings, including anticipated store openings in the second
quarter of fiscal 1999 and completed new store openings in the first quarter of
fiscal 1999. In the first quarter of 1999, the primary sources of the Company's
liquidity included a $12.1 million net increase in the amount outstanding under
the Company's revolver, proceeds of $3.0 million from gold consignment,
partially offset by a decrease of $3.4 million in outstanding checks. The
Company utilized cash in the first quarter of 1999 primarily to fund capital
expenditures of $4.4 million, primarily related to the opening of 13 new stores
in the first quarter of 1999, to fund the purchase of the Company's Common Stock
($9.3 million) and to repay a portion of the term loan ($1.0 million).
Management expects that cash flow from operating activities and funds
available under its revolving credit facility should be sufficient to support
the Company's current new store expansion program and seasonal working capital
needs for the foreseeable future.
Year 2000
The "Year 2000" problem concerns the inability of information systems to
properly recognize and process date-sensitive information beyond January 1,
2000. Like many companies, "Year 2000" computer hardware and software failures
of internal systems and/or of third party systems could have a significant,
adverse impact on all aspects of the Company's operations. Because of the range
of possible issues and the large number of variables involved, it is impossible
to quantify the potential cost of problems should the Company's remediation
efforts or the efforts of third parties with whom the Company does business not
be successful. The Company recognizes the need to address this problem in order
to minimize the effects of the "Year 2000" issue on its operations and its
relationships with vendors and other third parties. The Company is using both
internal and external resources to complete its "Year 2000" project.
The Company operates exclusively in one business segment, specialty retail
jewelry. All stores are located within the United States. The Company's two
principle mission-critical systems applications are the point-of-sale ("POS")
terminals and software which control store transaction processing, and the
centrally maintained information systems infrastructure which controls
financial, merchandising and administrative systems.
All stores use the same POS software which is licensed from a third-party
vendor. In the fall of 1998, a "Year 2000" compliant version of the POS software
was installed at all stores. Testing of the new software is
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substantially complete. The Company has replaced approximately 75-80% of its POS
desktop terminals with "Year 2000" compliant terminals. The remaining portion is
expected to be replaced by the end of summer, 1999.
The Company's financial management, information technology, merchandising
and other administrative functions operate centrally from the Company's
corporate office. The Company uses a mid-range computing platform which is
complemented by various networks. The operating systems and hardware platforms
were upgraded, tested and are currently "Year 2000" compliant. The replacement
or upgrading of financial management and various customized software packages is
nearing completion. These systems upgrades, replacements, renovations, and
testing thereof, are scheduled to be completed during the summer of 1999. Such
completion is currently on schedule. With respect to systems that the Company is
not upgrading, the Company is currently renovating those systems to be "Year
2000" compliant.
The Company is developing contingency plans to address unforeseen system or
environmental failures due to the "Year 2000" issue. The major focus of these
plans is to have documented procedures to handle the mission-critical functions
and to define the business tactics to identify and manage certain problems which
may occur as a result of the "Year 2000" issue in as non-disruptive a manner as
possible. The Company does not expect to be able to develop feasible contingency
plans to address all "Year 2000" related failures; and contingency plans which
are developed will only mitigate the impact of "Year 2000" failures.
The Company's total costs for making its mission-critical systems "Year
2000" compliant are not expected to be material to the Company's financial
condition. The estimated total cost of the "Year 2000" project is expected to
approximate $1.0 million. To date, the total amount expended on the project is
approximately $650,000.
The Company believes that the systems upgrades, replacements and
renovations will be made on a timely basis, and that the "Year 2000" issue with
respect to the Company's internal systems will not pose significant operational
problems or result in costs that have a material adverse impact on the Company's
business, financial condition or results of operations. A failure by the Company
to timely address the "Year 2000" issue, or a failure by the Company to maintain
adequate information systems capacity and infrastructure as it upgrades,
replaces and renovates its information systems, could have a material adverse
impact on the Company's business, financial condition or results of operations.
In addition to the Company's internal systems, certain systems of third
party suppliers and service providers which are not currently "Year 2000"
compliant could adversely impact the Company's operations. The Company has
confirmed with its primary lenders and private-label and other credit suppliers
that their systems are, or will on a timely basis be, "Year 2000" compliant. In
addition, certain key vendors and service providers have confirmed orally that
they are implementing plans to address the "Year 2000" issue. The Company will
continue communicating with its key suppliers and key service providers to
monitor their plans to address, and progress in addressing, the "Year 2000"
issue and to evaluate any impact on the Company. However, there can be no
assurance that the systems of third parties with whom the Company does business
will be converted timely. A failure by any such third party to timely address
the "Year 2000" issue could have a material adverse impact on the Company's
business, financial condition or results of operations.
Inflation
Management believes that inflation generally has not had a material effect
on results of its operations.
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Item 3 - Quantitative and Qualitative Disclosure About Market Risk
This information is set forth in the Company's Annual Report on Form 10-K
for the fiscal year ended January 31, 1999, and is incorporated herein by
reference. There have been no material changes to the Company's market risk
during the three months ended April 30, 1999.
PART II - OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security-Holders
(a) The Company held its annual meeting of stockholders on June 8, 1999.
(b) No answer required.
(c) Proposal 1 involved the election of two directors to serve until the
2002 Annual Meeting. Those directors and the voting results were as
follows:
For Withheld
-----------------------------
Matthew M. Patinkin 8,627,378 42,701
Richard K. Berkowitz 8,642,065 28,014
Proposal 2 involved approval of an amendment to the Company's 1997
Long-Term Incentive Plan
For Against or Abstained or
Withheld Broker Non-vote
-------------------------------------------
6,207,282 1,251,893 1,210,904
(d) Not applicable.
Item 5 - Other Information
Forward-Looking Statements
All statements, trend analysis and other information contained in this
report relative to markets for the Company's products and trends in the
Company's operations or financial results, as well as other statements including
words such as "anticipate," "believe," "plan," "estimate," "expect," "intend"
and other similar expressions, constitute forward-looking statements under the
Private Securities Litigation Reform Act of 1995. These forward-looking
statements are subject to known and unknown risks, uncertainties and other
factors which may cause actual results to be materially different from those
contemplated by the forward-looking statements. Such factors include, among
other things: (1) the extent and results of the Company's store expansion
strategy and associated occupancy costs; (2) the seasonality of the Company's
business; (3) economic conditions, the retail sales environment and the
Company's ability to execute its business strategy and the related effects on
comparable store sales and other results; (4) the extent and success of the
Company's marketing and promotional programs; (5) the extent to which the
Company is able to retain and attract key personnel as well as personnel costs;
(6) competition; (7) the availability and cost of consumer credit; (8)
relationships with suppliers; (9) timely "Year 2000" compliance by the Company
and third party suppliers and service providers; (10) the Company's ability to
maintain adequate information systems capacity and infrastructure; (11) the
efficient and successful integration of the Jewel Box locations and assets into
the Company's existing operations; (12) the Company's leverage and cost of
funds; (13) the Company's ability to maintain adequate loss
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prevention measures; (14) fluctuations in raw material prices including diamond,
gem and gold prices; (15) regulation; and (16) the risk factors listed from time
to time in the Company's filings with the Securities and Exchange Commission.
Item 6 - Exhibits and Reports on Form 8-K.
(a) Exhibits.
Exhibit 27 Financial Data Schedule (SEC/EDGAR only)
(b) Reports on Form 8-K.
None
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WHITEHALL JEWELLERS, INC.
(Registrant)
Date: June 15, 1999 By: /s/ John R. Desjardins
----------------------
John R. Desjardins
Executive Vice President -
Finance and Administration
(principal financial officer)
14
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<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-2000
<PERIOD-START> FEB-01-1999
<PERIOD-END> APR-30-1999
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<CASH> 0
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<RECEIVABLES> 5,058
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<INVENTORY> 134,483
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<DEPRECIATION> (27,426)
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0
0
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